Mayor pitches retail incentives

Developers of large retail centers soon could get help from City Hall. Mayor Walt Maddox has proposed an ordinance that would provide loans and tax abatements for large commercial developments.

By Patrick RupinskiStaff Writer

TUSCALOOSA | Developers of large retail centers soon could get help from City Hall. Mayor Walt Maddox has proposed an ordinance that would provide loans and tax abatements for large commercial developments.The plan, which must be approved by the City Council, would help attract big-name retailers that are not in the city; stem the flow of shoppers' dollars to other retail markets like Hoover, Birmingham and Bessemer; create jobs; and increase the city's revenues.Maddox said the plan would not increase local residents' taxes because the city-approved loans would be made through a bond issue that would be paid off by the developers over 10 years. Developers who chose tax abatements would be allowed to keep a set portion of the sales and property taxes generated by the new development for 10 years to recover part of development costs.Maddox said the plan is needed to make the city more competitive with other Alabama cities that have used various incentives to attract major retail developments.He cited the Summit in Birmingham, the rebuilt Brookwood Village in Homewood and the Colonial Promenade in Bessemer as retail developments in the state that received financial assistance from their local governments.“We might be looking at this as incentives, but it really is an investment,” Maddox said. “It is a way to get new shopping centers and create new jobs.”Maddox said West Alabama residents, including many from Tuscaloosa, spend at least $100 million annually while shopping outside the county, with much of that spending going to nearby Jefferson and Shelby counties. Those counties have many major retailers that are not in Tuscaloosa, he said.Bill Snowden, who handles the city's economic development efforts, said he believes area residents spend about $200 million annually in shopping outside the county.Snowden said he sees numerous vehicles with Tuscaloosa County car tags, which begin with 63, when he visits the Riverchase Galleria, the Summit and even shopping centers in Meridian, Miss. Most of those shoppers have made the trips because the retailers are not in Tuscaloosa, he said.And those out-of-town shoppers buy gas and eat at restaurants in addition to buying goods, Maddox said.“That's money that's not spent here,” he said.The mayor said many Alabama cities smaller than Tuscaloosa have been able to attract retailers that have bypassed West Alabama because they have used various incentive programs.“My goal is to implement (the loan/incentive program) before the economic recovery occurs so it will be ready to use,” he said.Projections call for a slow recovery, and Maddox said he expects a lot of competition among communities to get more retailers in the next several years.During the past several years, Tuscaloosa has helped some new commercial projects by paying for some improvements on the public right-of-way.Those payments have included $1,778,000 for Tuscaloosa Chevrolet, $1,574,000 for Midtown Village, and $917,000 for Publix North Shopping Center.The proposal would specify what was eligible for assistance and how the city incentives would be repaid.Developers could get either a bond-financed loan or tax abatements that could not exceed 10 percent of the development's eligible improvement costs. The developer would pay off the loan's bond with its interest over 10 years using revenues from the development. The loan would give the developer the money up front for the work, Maddox said.Developers choosing tax abatement would be able to keep a portion of the sales and property taxes from the development for 10 years to recover part of their up-front costs. If the development failed to generate enough money to meet the developer's obligation, the developer would have to make up the difference. The new tax revenue generated also would factor in a 50 percent substitution effect.The substitution effect refers to tax revenues that the city might lose from existing merchants who might lose part of their sales to new stores. If Bed Bath & Beyond came to Tuscaloosa, for example, it could result in reduced sales in linens and bedding at Belk or other retailers carrying similar goods.To be eligible for the program, the development would have to have at least 100,000 square feet of retail space and have at least $11,350,000 in private investment, Maddox said.Eligible improvements would include parking lots and parking decks serving just the development; lighting within the development; sidewalk and bicycle paths in the development; landscaping, grading and fill at the development site; and redevelopment of vacant commercial space. Drainage and storm sewers also would be eligible.The proposal might be on the fast-track for approval.Councilman Lee Garrison, who chairs the finance committee, asked the city's legal department to draft an ordinance incorporating Maddox's proposal so that it could be on the committee's agenda in late March or early April.If the committee approvals the ordinance, it would go to full City Council for approval. “Not doing anything is not an option,” Garrison said.Councilman William Tinker said, “I think we have a need for it. It will make us more competitive with other cities in getting new retailers.”And Councilman Harrison Taylor said “I think we can't sit still. Just look at Prattville (which has used incentives). There was nothing there, and now it is one of the most-shopped-at place(s) in the state.”Maddox urged council members to carefully consider the proposal, talk to citizens about it and make suggested changes. He said the council, if it wished, could hold a public hearing on the proposal.